PAUL HOLMES: Rising involvement of procurement people is a reality corporate PR pros have to deal with

PR firm principals aren't happy these days. The recovery many of them anticipated in the fourth quarter of 2002 failed to materialize, and the prospect of a war in Iraq makes any rebound this year unlikely.

PR firm principals aren't happy these days. The recovery many of them anticipated in the fourth quarter of 2002 failed to materialize, and the prospect of a war in Iraq makes any rebound this year unlikely.

Employee morale is down, the new-business process is slow as molasses, and parent companies are demanding more cost cutting. But a new factor in client-agency relationships is causing more concern than any of that: the increasing involvement of procurement people. In many cases, procurement departments are running new-business pitches, and they are asking for information that many firms considered privileged until recently: highly specific data about pay scales for account staff at different levels, overhead, even profit margins. They are using that information to tell firms how much they are willing to pay for an hour of an AE's time, how much they feel a press conference is worth, and essentially how much profit they're ready to let the firm make. Some agency principals concede some benefit from all this. By demanding such information, procurement people force firms to exercise more fiscal discipline. Over time, this emphasis may give rise to best practices that are widely adopted by anyone who wants to compete for big accounts. But questions still exist as to whether procurement people fully understand the business they're overseeing, and whether they're treating a creative process as little more than a commodity. Many RFPs now come directly from procurement people, and contain dire warnings that any attempt to contact the organization's marketing or corporate communications people will result in disqualification. That's fine, until an agency simply asks, "What are your communications goals?" and is told (real-life example) by the procurement person, "I don't understand your question." The inference is that procurement people not only don't understand, they also don't care. They are less concerned with meeting communications objectives than they are with meeting budgetary fiats. They care more about cost than about value. It's clear that many corporate communications professionals share that concern. Some fear they are being directed to hire firms because they are cheaper, or, in some cases, offer a month of free service rather than because they are best suited for the job. Important but intangible elements of the hiring process - like chemistry and creativity - are being overlooked because they're hard to quantify. Procurement people are not going away, so PR people must educate them about their business, and agencies must have the discipline to reject clients who ask them to squeeze margins to the point that their culture is compromised.
  • Paul Holmes has spent the past 15 years writing about the PR business for publications including PRWeek, Inside PR, and Reputation Management. He is currently president of The Holmes Group and editor of www.holmesreport.com.

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